Asked in Taxes and Tax Preparation
What percentage is taken out of your check for state and federal taxes?
November 28, 2008 5:48PM
It depends on many, many things...not the least of which is what you consider tax. Many people group all their withholdings as a type of tax, but many may not be. Workers Comp, Unemployment, even FICA are all really more an insurance payment than a withholding against an income tax. Two people, living next door to each other in idetical houses, and working for the same wage at the same job would almost always have different tax situations, owe different amounts, and hence, have different amounts withheld. Sometimes by substantial amounts. The amount of tax withheld also depends on may things...obviously which state (or even city) your in, the amount of income your projected on earning over the year (and includes many more things than just your employment income - and which benefits you may select, etc), that helps determine your tax bracket and the percent that may be needed, as well as your filing status, number of dependents and other deductions (medical expenses, mortgage costs, investment losses/gains, etc). All these things can be adjusted for your circumstances by properly and completely filling out (or changing) the Form W-4 all employers ask you to. There are a number of different legal ways for the payroll provider to calculate certain aspects of the amount to withhold...but overall they make only a small difference. Remember, anything withheld is just being done as an estimated installment payment toward whatever tax, if any, you do ultimately owe. If too much is withheld, it is refunded. (Too little, and you could pay a penalty). Again, adjusting your W-4 is the way to correct for any of these circumstances.